Farmers & Merchants Bancorp, Inc. Reports 2017 Second-Quarter and Year-to-Date Financial Results
ARCHBOLD, Ohio, July 19, 2017 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq:FMAO) today reported financial results for the 2017 second quarter and year-to-date June 30, 2017.
2017 Second Quarter Financial Highlights Include (on a year-over-year basis unless noted):
- 57 consecutive quarters of profitability
- Total assets up 4.4% to $1,066,175,000
- Total loans increased 8.3% to $790,838,000
- Net interest income after provision for loan losses increased 10.6% to $8,846,000
- Net income increased 8.4% to $3,223,000
- Earnings per basic and diluted shares increased 7.7% to $0.70
- Declared quarterly dividend increased 8.7% to $0.25 per share
- Return on average assets was 1.21%, up from 1.17%
- Return on average equity was 9.96%, up from 9.61%
“Record total loans outstanding and higher rates drove a 7.7% increase in F&M’s diluted earnings per share for the 2017 second quarter,” stated Paul S. Siebenmorgen, President and Chief Executive Officer. “In addition, during the second quarter F&M achieved several significant milestones including appearing in American Banker Magazine’s Top 200 Publicly Traded Community Banks and Thrifts, listing our common stock on the NASDAQ Capital Market, joining the Russell 3000® index, and increasing the second quarter declared cash dividend by 8.7% to $0.25 per share. F&M’s strong year-to-date results reflect the platform we have created to drive sustainable and profitable growth. With leading market share in many of our communities, we are focused on increasing our presence in larger, higher growth markets. To this end, our new branches in Bowling Green, Ohio and Huntertown, Indiana are operating in line with our expectations. Both branches have strong, experienced, and motivated teams that are quickly establishing themselves within their local communities.”
Income Statement
Net income for the 2017 second quarter ended June 30, 2017 was $3,223,000, or $0.70 per basic and diluted share compared to $2,974,000, or $0.65 per basic and diluted share for the same period last year. The 8.4% improvement in net income for the 2017 second quarter was primarily due to a 10.6% increase in net interest income after provision for loan losses, partially offset by a slight decline in noninterest income, and by a small increase in noninterest expenses. Net income for the 2017 first half was $6,062,000, or $1.31 per basic and diluted share compared to $5,455,000, or $1.18 per basic and diluted share for the first half of 2016.
Loan Portfolio and Asset Quality
Total loans at June 30, 2017 increased 8.3% to a record $790,838,000, compared to $729,915,000 at June 30, 2016, and up 4.0% from $758,820,000 at December 31, 2016. Year-over-year loan growth was strong across many of the company’s lending areas and included a 17.8% increase in commercial and industrial loans, a 16.2% increase in consumer loans, an 11.2% increase in industrial development bonds, a 10.3% increase in commercial real estate loans, a 6.3% increase in agricultural real estate loans, and a 0.4% increase in agricultural loans, partially offset by a 4.7% reduction in consumer real estate loans.
The company’s provision for loan losses for the 2017 second quarter was $25,000, compared to $339,000 for the 2016 second quarter. Year-to-date, the provision for loan losses was $98,000, compared to $616,000 for the same period last year. The second quarter and year-to-date decrease in provision expense was a result of low charge offs, and stable asset quality within the company’s loan portfolio.
F&M’s loan quality remains strong as the allowance for loan losses to nonperforming loans was 502.2% at June 30, 2017, compared to 424.9% at June 30, 2016. Net charge-offs for the second quarter ended June 30, 2017 were $17,000, or 0.00% of average loans, compared to $131,000 or 0.02% of average loans, at June 30, 2016. Year-to-date, net charge-offs were $24,000, or 0.00% of average loans outstanding, compared to $180,000, or 0.01% of average loans outstanding for the same period last year.
Stockholders’ Equity and Dividends
Tangible stockholders’ equity increased to $126,582,000 at June 30, 2017, compared to $120,763,000 at December 31, 2016, and $119,913,000 at June 30, 2016. On a per share basis, tangible stockholders’ equity at June 30, 2017 was $27.39, compared with $26.13 at December 31, 2016, and $26.04 at June 30, 2016. The increase in tangible stockholders’ equity is the result of growth in retained earnings due to increased profitability. At June 30, 2017, the company had a Tier 1 leverage ratio of 11.96%, compared to 11.74% at June 30, 2016.
For the 2017 second quarter, the company declared cash dividends of $0.25 per share. The dividend payout ratio at June 30, 2017 was 35.5% compared to 35.3% for the same period last year.
Mr. Siebenmorgen concluded, “F&M remains committed to becoming our customers’ Bank for Life. As a result, we must successfully manage growth with credit risk, and F&M continues to report strong asset quality. At June 30, 2017, non-performing assets declined 28.2% and net charge-offs declined 87.0% from the prior year period, while our loan portfolio has increased 8.3%. Continued loan growth, proactive cost management, and strong asset quality, has helped improve profitability. Reflecting continued improvements in profitability and F&M’s focus on creating value for shareholders, F&M’s board of directors approved an 8.7% increase in our quarterly dividend, representing the 18th consecutive year we have increased our dividend payment. As you can see, operating and financial momentum remained strong in the second quarter and we expect 2017 will be another good year for the bank.”
About Farmers & Merchants State Bank:
The Farmers & Merchants State Bank is a local independent community bank that has been serving Northwest Ohio and Northeast Indiana since 1897. The Farmers & Merchants State Bank provides commercial banking, retail banking and other financial services through its 24 offices. Our locations are in Fulton, Defiance, Henry, Lucas, Williams, and Wood counties in Northwest Ohio. In Northeast Indiana, we have offices located in DeKalb, Allen and Steuben counties.
Safe harbor statement
Farmers & Merchants Bancorp, Inc. ("F&M") wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995. Statements by F&M, including management's expectations and comments, may not be based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties inherent in general and local banking conditions, competitive factors specific to markets in which F&M and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions or capital market conditions. F&M assumes no responsibility to update this information. For more details, please refer to F&M's SEC filing, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such filings can be viewed at the SEC's website, www.sec.gov.
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME (UNAUDITED) | ||||||||||||||||||
(in thousands of dollars, except per share data) | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
Interest Income | ||||||||||||||||||
Loans, including fees | $ | 9,120 | $ | 8,362 | $ | 17,820 | $ | 16,368 | ||||||||||
Debt securities: | ||||||||||||||||||
U.S. Treasury and government agencies | 623 | 595 | 1,265 | 1,175 | ||||||||||||||
Municipalities | 300 | 380 | 615 | 749 | ||||||||||||||
Dividends | 44 | 37 | 86 | 75 | ||||||||||||||
Federal funds sold | 3 | 2 | 3 | 2 | ||||||||||||||
Other | 34 | 11 | 56 | 22 | ||||||||||||||
Total interest income | 10,124 | 9,387 | 19,845 | 18,391 | ||||||||||||||
Interest Expense | ||||||||||||||||||
Deposits | 1,098 | 885 | 2,128 | 1,739 | ||||||||||||||
Federal funds purchased and securities sold | ||||||||||||||||||
under agreements to repurchase | 118 | 126 | 231 | 231 | ||||||||||||||
Borrowed funds | 37 | 36 | 73 | 73 | ||||||||||||||
Total interest expense | 1,253 | 1,047 | 2,432 | 2,043 | ||||||||||||||
Net Interest Income - Before Provision for Loan Losses | 8,871 | 8,340 | 17,413 | 16,348 | ||||||||||||||
Provision for Loan Losses | 25 | 339 | 98 | 616 | ||||||||||||||
Net Interest Income After Provision | ||||||||||||||||||
For Loan Losses | 8,846 | 8,001 | 17,315 | 15,732 | ||||||||||||||
Noninterest Income | ||||||||||||||||||
Customer service fees | 1,330 | 1,308 | 2,811 | 2,786 | ||||||||||||||
Other service charges and fees | 1,209 | 999 | 2,080 | 1,909 | ||||||||||||||
Net gain on sale of loans | 218 | 234 | 419 | 403 | ||||||||||||||
Net gain on sale of available for sale securities | 16 | 343 | 47 | 456 | ||||||||||||||
Total noninterest income | 2,773 | 2,884 | 5,357 | 5,554 | ||||||||||||||
Noninterest Expense | ||||||||||||||||||
Salaries and Wages | 3,137 | 2,840 | 6,138 | 5,680 | ||||||||||||||
Employee benefits | 783 | 715 | 1,705 | 1,577 | ||||||||||||||
Net occupancy expense | 374 | 346 | 787 | 724 | ||||||||||||||
Furniture and equipment | 491 | 443 | 963 | 855 | ||||||||||||||
Data processing | 308 | 361 | 619 | 772 | ||||||||||||||
Franchise taxes | 225 | 225 | 450 | 439 | ||||||||||||||
Net loss on sale of other assets owned | 14 | - | 14 | 45 | ||||||||||||||
FDIC Assessment | 82 | 121 | 165 | 242 | ||||||||||||||
Mortgage servicing rights amortization | 97 | 99 | 181 | 188 | ||||||||||||||
Other general and administrative | 1,587 | 1,507 | 3,147 | 3,121 | ||||||||||||||
Total other operating expenses | 7,098 | 6,657 | 14,169 | 13,643 | ||||||||||||||
Income Before Income Taxes | 4,521 | 4,228 | 8,503 | 7,643 | ||||||||||||||
Income Taxes | 1,298 | 1,254 | 2,441 | 2,188 | ||||||||||||||
Net Income | 3,223 | 2,974 | 6,062 | 5,455 | ||||||||||||||
Other Comprehensive Income (Net of Tax): | ||||||||||||||||||
Net unrealized gain on available for sale securities | 2,044 | 649 | 2,456 | 2,594 | ||||||||||||||
Reclassification adjustment for gain on sale of available for sale securities |
(16 | ) | (343 | ) | (47 | ) | (456 | ) | ||||||||||
Net unrealized gain on available for sale securities | 2,028 | 306 | 2,409 | 2,138 | ||||||||||||||
Tax expense | 690 | 104 | 819 | 727 | ||||||||||||||
Other comprehensive income | 1,338 | 202 | 1,590 | 1,411 | ||||||||||||||
Comprehensive Income | $ | 4,561 | $ | 3,176 | $ | 7,652 | $ | 6,866 | ||||||||||
Earnings Per Share - Basic and Diluted | $ | 0.70 | $ | 0.65 | $ | 1.31 | $ | 1.18 | ||||||||||
Dividends Declared | $ | 0.25 | $ | 0.23 | $ | 0.48 | $ | 0.45 | ||||||||||
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(in thousands of dollars) | ||||||||||
June 30, 2017 | December 31, 2016 | |||||||||
(Unaudited) | ||||||||||
Assets | ||||||||||
Cash and due from banks | $ | 28,613 | $ | 27,348 | ||||||
Federal funds sold | 646 | 974 | ||||||||
Total cash and cash equivalents | 29,259 | 28,322 | ||||||||
Interest-bearing time deposits | 2,541 | 1,915 | ||||||||
Securities - available-for-sale | 195,582 | 218,527 | ||||||||
Other securities, at cost | 3,717 | 3,717 | ||||||||
Loans held for sale | 1,666 | 2,055 | ||||||||
Loans, net | 783,980 | 751,310 | ||||||||
Premises and equipment | 20,942 | 21,457 | ||||||||
Goodwill | 4,074 | 4,074 | ||||||||
Mortgage servicing rights | 2,230 | 2,192 | ||||||||
Other real estate owned | 630 | 774 | ||||||||
Bank owned life insurance | 14,334 | 14,376 | ||||||||
Other assets | 7,220 | 7,176 | ||||||||
Total Assets | $ | 1,066,175 | $ | 1,055,895 | ||||||
Liabilities and Stockholders' Equity | ||||||||||
Liabilities | ||||||||||
Deposits | ||||||||||
Noninterest-bearing | $ | 189,770 | $ | 186,390 | ||||||
Interest-bearing | ||||||||||
NOW accounts | 274,236 | 230,446 | ||||||||
Savings | 226,505 | 226,537 | ||||||||
Time | 186,964 | 198,830 | ||||||||
Total deposits | 877,475 | 842,203 | ||||||||
Federal Funds purchased and | ||||||||||
securities sold under agreements to repurchase | 40,095 | 70,324 | ||||||||
Federal Home Loan Bank (FHLB) advances | 10,000 | 10,000 | ||||||||
Dividend payable | 1,144 | 1,053 | ||||||||
Accrued expenses and other liabilities | 6,226 | 6,738 | ||||||||
Total liabilities | 934,940 | 930,318 | ||||||||
Commitments and Contingencies | ||||||||||
Stockholders' Equity | ||||||||||
Common stock - No par value 10,000,000 shares authorized; | 12,150 | 11,947 | ||||||||
issued and outstanding 5,200,000 shares 6/30/17 and 12/31/16 | ||||||||||
Treasury Stock - 579,125 shares 6/30/17, 579,125 shares 12/31/16 | (12,267 | ) | (12,267 | ) | ||||||
Retained earnings | 131,734 | 127,869 | ||||||||
Accumulated other comprehensive loss | (382 | ) | (1,972 | ) | ||||||
Total stockholders' equity | 131,235 | 125,577 | ||||||||
Total Liabilities and Stockholders' Equity | $ | 1,066,175 | $ | 1,055,895 | ||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||
June 30 | June 30 | |||||||||||||
Selected financial data | 2017 | 2016 | 2017 | 2016 | ||||||||||
Return on average assets | 1.21 | % | 1.17 | % | 1.14 | % | 1.08 | % | ||||||
Return on average equity | 9.96 | % | 9.61 | % | 9.47 | % | 8.90 | % | ||||||
Yield on earning assets | 4.11 | % | 3.99 | % | 4.05 | % | 3.98 | % | ||||||
Cost of interest bearing liabilities | 0.68 | % | 0.58 | % | 0.66 | % | 0.58 | % | ||||||
Net interest spread | 3.43 | % | 3.41 | % | 3.39 | % | 3.40 | % | ||||||
Net interest margin | 3.61 | % | 3.56 | % | 3.56 | % | 3.55 | % | ||||||
Efficiency | 60.27 | % | 60.15 | % | 61.53 | % | 62.56 | % | ||||||
Dividend payout ratio | 35.49 | % | 35.34 | % | 36.24 | % | 37.69 | % | ||||||
Tangible book value per share | $ | 27.39 | $ | 26.04 | ||||||||||
Tier 1 capital to average assets | 11.96 | % | 11.74 | % | ||||||||||
June 30 | ||||||||||||||
Loans | 2017 | 2016 | ||||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Commercial real estate | $ | 394,649 | $ | 357,838 | ||||||||||
Agricultural real estate | 64,035 | 60,253 | ||||||||||||
Consumer real estate | 84,307 | 88,464 | ||||||||||||
Commercial and industrial | 122,950 | 104,336 | ||||||||||||
Agricultural | 83,614 | 83,287 | ||||||||||||
Consumer | 35,394 | 30,458 | ||||||||||||
Industrial development bonds | 6,617 | 5,952 | ||||||||||||
Less: Net deferred loan fees and costs | (728 | ) | (673 | ) | ||||||||||
Total loans | $ | 790,838 | $ | 729,915 | ||||||||||
June 30 | ||||||||||||||
Asset quality data | 2017 | 2016 | ||||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Nonaccrual loans | $ | 1,365 | $ | 1,528 | ||||||||||
Troubled debt restructuring | $ | 662 | $ | 795 | ||||||||||
90 day past due and accruing | $ | - | $ | - | ||||||||||
Nonperforming loans | $ | 1,365 | $ | 1,528 | ||||||||||
Other real estate owned | $ | 630 | $ | 1,252 | ||||||||||
Non-performing assets | $ | 1,995 | $ | 2,780 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Allowance for loan and lease losses | $ | 7,077 | $ | 6,493 | ||||||||||
Allowance for loan and lease losses/total loans | 0.89 | % | 0.89 | % | ||||||||||
Net charge-offs: | ||||||||||||||
Quarter-to-date | $ | 17 | $ | 131 | ||||||||||
Year-to-date | $ | 24 | $ | 180 | ||||||||||
Net charge-offs to average loans | ||||||||||||||
Quarter-to-date | 0.00 | % | 0.02 | % | ||||||||||
Year-to-date | 0.00 | % | 0.01 | % | ||||||||||
Non-performing loans/total loans | 0.17 | % | 0.21 | % | ||||||||||
Allowance for loan and lease losses/nonperforming loans | 502.23 | % | 424.86 | % |
Company Contact:
Marty Filogamo
Senior Vice President – Marketing Manager
Farmers & Merchants Bancorp, Inc.
(419) 445-3501 ext. 15435
mfilogamo@fm.bank
Investor and Media Contact:
Andrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
andrew@smberger.com